Debt Management Plans

Gaia2014

Hi

I'm new to this site, but not to debt unfortunately. Currently have a DMP in place and trying to pay off £7,500.

Thinking of changing to another DMP because i'm currently paying a £30 administration charge a month, which could be going towards paying off my debts quicker, but obviously it takes away some of the stress. Also, the communication isn't great with my current DMP, which increases the stress levels

Feeling quite despondent because I've technically got another 5 years or so until the debts paid off on my current plan (can't afford to increase payments currently) and I can't imagine a day when I'll have peace of mind... Living in London, which doesn't help financially.

I'm thinking of moving to Step Change. Are there any other similar companies out there or is Step Change the best? Half my debts are from my student days (over 10 years ago) and irresponsible spending habits in my 20's. Hindsight is a wonderful thing

maganan

Have a look at the step change web site and their debt remedy tool, another charity is Christians against poverty I think and there is also payplan which although free I don't think is a charity, the is also loads of advice about self managing on the national debt line site and citizens advice. That said the best place for advice is the mutual support thread on here everyone is friendly and has been or is in the same position so won't judge

Good luck

Kate x

Monkeyballs

Morning Gaia,

You definitely should stop paying for a company to "manage" your DMP for you.

There have been a few horror stories of late regarding paid for companies so I also suggest that you contact your creditors to get balance updates too, I'm not suggesting that they are not getting paid but you need accurate figures for Step Change (or other, but I personally am with SC) to work with.

Some people worry about SC and how they make their money, it's a charity and take nothing from their customers but your creditors do pay a small contribution each month - meaning all of what you pay comes off your debts.

I have been with SC now for about a year, there were a few calls and letters in the beginning but I wouldn't expect you to get this since you have a plan in place so it should just be a handover...

What I would recommend though is to get a little bit more involved in your DMP and contact your creditors regularly for balance updates, etc as this ensures accurate information and no surprises later on down the line...

You probably want to check out the DMP mutual support thread too loads of friendly people either in the same boat or having been in and gotten out of the boat lol

https://forums.moneysavingexpert.com/discussion/4988866

MB of G

National_Debtline

Hi Gaia

Welcome to the forum. It's good that you are questioning the value of a fee-charging DMP. The "horror stories" referred to by MB aren't just a recent phenomenon, they've existed as long as the industry itself.

By my rough sums, you'd be able to shave the best part of a year off your plan by using a free provider.

There is some more information about DMPs on our web site:

https://www.nationaldebtline.org/EW/factsheets/Pages/29%20EW%20Debt-management%20plans%20%28DMPs%29/Default.aspx

Good luck

Dennis
Twitter: @natdebtline

Gaia2014

Thank you for the replies. I actually considered moving to Step Change quite recently, but bottled out at the last minute - the thought of going though approximately 12 debts felt too much. Plus, my current DMP hadn't sent me a list of my creditors details as I requested (several times) - some of the original debts have been transferred to another DCA but the agencies hadn't contacted me! Anyway, I have most of the information I need.... some of the debts are really smalls (say under £100) so I feel I should clear those first and then I'll have less to deal with (either alone or via Step Change or similar).

I'm with Churchwood Financial at the moment (for the past 5 years) and feel I need to change in order to in order to pay my debts off faster. I feel like I'm treading water at the moment and tbh it's depressing. I work hard and these debts are hanging over me like a black cloud. I'm currently paying £150 a month (including £30 management fee to CF) so around £120 is going to my creditors. I still owe £7,500.

What I struggle with most of all is the stigma of being in debt to these various companies and how it impacts on my life in terms of buying a house etc. Somebody told me that having a DMP will still affect my credit rating 5 years after my debts are cleared! Trying to stay positive and focussed on paying the debts back, but it's hard. The majority of them are student debts from the 1990's!...I was planning on increasing my repayments this year to really tackle them, but following a breakdown in my relationship this option is not available to me at present. I feel like my life is passing me by and all I can think about is these ***** debts! I know I'll pay them off one day, but my life is on hold until them. Sorry for the negative rant!.... Rant over :mad: Better out than in

seanavfc92

I, personally, would get in touch with StepChange ASAP. As you rightly said, that £30 can go to your creditors instead of the DMC.

Your priority if you did would be to cancel the direct debit you have set up to pay Churchwood. You're on a DMP so you're not legally bound to it and can cancel at any time.

Based on setting a DMP up with a non-fee charger and paying £150 per month, you'd be paying that for 4y 2m (provided all of your creditors stop interest/charges)

Paying £120 per month to your creditors through Churchwood, you've still got 5y 3m left to pay. That means by the end of your plan with them, you'll have paid £1875 in admin fees from this point onwards, let alone what you've already paid! :eek:

It really is easy to set a DMP up through StepChange. All you need to do is complete a debt advice session over the phone or filling in the Debt Remedy application.

Send some paperwork back to them and let them get on with the rest of it!

As people have said, why pay a company to "manage" your debts when there's companies out there willing to do it for free!

Best of luck with whatever you do :beer:

Tixy

Gaia2014 wrote: »

Somebody told me that having a DMP will still affect my credit rating 5 years after my debts are cleared!

That is not necessarily the case at all. It all depends on what your creditors have put on your credit file so far.

It is quite common for a person in a long DMP to have all record of their debts/defaults etc drop off before the DMP has even ended - and in those cases people can then start rebuilding their credit file straight away at the end of the DMP.

Ideally in a DMP you want your creditors to issue default notices very quickly. A default and the debt associated with it drop off your file 6years after the default date on file.

Obviously if a creditor took court action against a debtor at a later stage this would affect a person's credit file for much longer, but court action is rare when on a DMP.

Stepchange are well recommended on the site, but another option which works for some people is to self-manage their DMP using the tools of somewhere like this - https://nedcab.cabmoney.org.uk/dmp.asp

fermi

Tixy wrote: »

That is not necessarily the case at all. It all depends on what your creditors have put on your credit file so far.

Yes. https://forums.moneysavingexpert.com/discussion/4757020

longtermplanner

hi Gaia,

you should definitely leave this fee charging company. Just a bit over 4 years is much better than 5! Stepchange are used to 'taking over' DMPs in this situation so it should be pretty smooth.

Moving DMP companies won't affect your credit record at all. Get a copy of your experian record and see whether your debts have been marked as defaulted.

Gaia2014

...I've arranged to discuss my situation with SC at the weekend - and in the meantime I will fill out the debt remedy tool. Should have done it sooner really, but never mind. Feeling a bit more positive about it all, but been a bit of a hermit lately - difficult to be around people outside work sometimes (enjoy my work thankfully) just wish I had more to show for it ....Anyhow, I'm doing something about it (debt) so onwards and upwards. Sometimes feels like the best years of my life have been tainted by this - feel ashamed and worry it'll impact on any future relationship (once they find out I've got a DMP). I know this isn't the case, but sometimes when I'm feeling low... PMA :T:

Growurown

Hi Gaia
I've been in a DMP with Step Change for three years now and it's been an absolute godsend. Go for it. It will mean all your money will go towards your debts and not in someone's pocket.